Abraxus investors accuse board of secret share deal

A row has broken out at Abraxus Investments, an AIM-listed property company, with investors trying to oust the board and accusing it of "issuing shares to one director and his close associates six working days" before buying "an unlet, speculative development" in Hungary.

Langdale Overseas Property Services claims it was not consulted about the issue or the property deal. An extraordinary meeting to hear the concerns will be held in London in two weeks.

Langdale, which saw its shareholding in Abraxus diluted from 26pc to 19pc after the issue, is irked by Abraxus's decision to raise £500,000 to issue 8.2m shares on February 17, claiming that the shares were only offered to a handful of people or organisations.

Days later, on March 1, Abraxus bought its first asset, a building in Budapest for £960,000 which it now hopes to turn into an 80-to-100 room hotel, at a cost of another £6m.

In a letter on June 10 sent to Abraxus's 1,400 shareholders, Langdale, led by father and daughter team Neil and Emma Sinclair, said: "The property concerned is an unlet, speculative development which is not income producing and will require considerable expenditure, the funding for which has not, as far as we are aware, yet been arranged."

It criticised the current board's track record. It said: "Over the period of their involvement, the share price has either languished or fallen at a time when the property-related shares have increased substantially."

Abraxus had net assets of £1.9m at the end of March 2004, and made operating losses of £148,771 in the year to the end of March 2004, down from £275,694 in 2003. No turnover was recorded in either year. Abraxus's shares closed unchanged at 6.75p, valuing it at £2m.

Abraxus admitted that not all shareholders were invited to participate in the fund raising, although some "independent people bought the shares" at the time of the fund-raising.

One source said: "As far as the company was concerned it was raised at a premium. It was not a general offer. [It was made] through their broker and through contacts they might have known."

An Abraxus spokesman said: "We believe that we have the right strategy for shareholders and in absence of them releasing details of their strategy, it is in the interests of shareholders that they fail. If they would tell us what their strategy is then we will talk to them."